In Barney Greengrass Inc. v. Lumberman’s Mutual Casualty Co., 09 Civ. 7697 (S.D.N.Y. 2010), the insured — a well-known Manhattan deli celebrated for its sturgeon — was sued by its landlord for claims by a resident that “overpowering food odors” emanating from the deli caused his apartment to be uninhabitable. The deli tendered the claim to its insurer who then disclaimed on the grounds of the pollution exclusion.

The federal court ruled that the “pollution” exclusion does not apply to restaurant odors because a reasonable insured would not understand the exclusion to cover the natural byproduct of its business for which it is celebrated. The court pointed to a Zagat survey of the restaurant that stated: “The smells alone are worth the price of admission.”

http://cityroom.blogs.nytimes.com/2010/08/02/in-many-ways-judge-says-insurers-argument-stinks/

http://pdf.wcmlaw.com/pdf/Greengrass.pdf

Thanks to Mendel Simon for his contribution to this post.